VENEZUELA’S deepening economic crisis will not be solved by the Petro cryptocurrency and introducing the digital token has only made a desperate situation even worse, an expert has warned.
President Nicolas Maduro brought in the Petro as Venezuela’s second unit of currency this week in a bid to curb crippling hyperinflation and skirt US sanctions.
But the cryptocurrency is nothing more than a “smoke and mirrors” scheme by the debt-ridden government and its introduction has already failed in its main aims, Lianna Brinded said.
The Head of Finance at Yahoo Finance told Express.co.uk the unprecedented introduction of a government-backed cryptocurrency is actually making Venezuela’s problems worse.
And she warned the Petro is most likely a scam because the country’s government controls ‘production’ of the virtual currency and the tokens cannot be traded.
Ms Brinded said: “The Petro cryptocurrency isn’t working. It’s made thing worse.
“It’s a smoke and mirrors operation. They are trying to cure their economic ills but this is not the way to go.
“All the Petro is doing is making a bad situation absolutely horrific.
“There are ways to escape hyperinflation but the Petro isn’t the way. There is absolutely no way this will work.”
Venezuela has been brought to its knees by an ever-worsening economic crisis which has seen citizens flee as shortages and riots plague the South American nation.
The creation of the Petro was sanctioned by the Venezuelan government as part of an attempt to boost the country’s national currency, the bolivar, which has been gripped by hyperinflation.
Prices of everyday goods have rocketed as the currency depreciates, with people being forced to hand over stacks of near-worthless banknotes to make even small purchases.
And economists have warned the inflation rate could go higher than one million percent by the end of the year.
In an attempt to handle the crisis, President Maduro ordered the printing of a new ‘sovereign bolivar’ which removed five zeros from the outgoing currency.
Mr Maduro also introduced the Petro, which now sits alongside the sovereign bolivar.
The cryptocurrency’s value is supposedly guaranteed by Venezuela’s vast oil reserves and according to the president, its introduction was supposed to help drive “a substantial improvement in the income of the workers”.
The Petro was also introduced as a way for President Maduro to get around US sanctions which were imposed in May after the 55-year-old was re-elected in what Washington branded a “sham” election.
But Ms Brinded said the digital currency had already failed in both of its aims and the economic situation in Venezuela is likely to get worse.
She said: “The currency is in hyperinflation mode and all those other issues aren’t going to be solved with a cryptocurrency.
“It’s a smoke and mirrors thing. It is a way for them to try and get around US sanctions.
“It hasn’t worked in that sense and it hasn’t bolstered the sovereign bolivar.
“It seems like a fool’s errand.”